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Mortgage rates were modestly higher last week, but managed to improve by the end of this week following a saga of trade-related headlines. In fact, trade war drama dominated this week's news cycle and financial market volatility.

In general, when the trade deal looked to be souring, it was a good thing for rates and bad for stocks. The only catch is that there are more than a few kinds of interest rates in the US, and mortgages weren't benefiting from the drama nearly as much as core rates like US Treasuries. The reasons for this are complex, but they have to do with a mortgage-specific report that came out on Monday (which had to do with how quickly some newer mortgages were being paid off due to recent drops in rate--something that affects how much mortgage debt is worth to investors).

Nonetheless, bonds gained enough for mortgage rates to edge lower, even if not in proportion to US Treasuries. By the end of the week, the trade war drama was largely over and done with. The net effect could be upward pressure on rates by default next week (all other things being equal... you never know when the next source of drama will crop up).

-Matt Graham, COO, MortgageNewsDaily.com

30 Year Fixed Rate Mortgage

Week in Review

Rates shown below are based on the 30 Year Fixed Rate Mortgage

Beginning Average:

4.29%

Ending Average:

4.24%

Weekly Change:

-0.05%

Yearly Change:

-0.35%

Friday, May 3, 2019 : 4.29% (+0.00%)

Mortgage rates were flat today, which is a victory considering the big jobs report was stronger than expected. Typically, labor market strength--especially when seen in this particular report--is bad news for rates, but it didn't happen today. In fact, after a brief initial reaction, the underlying bond market actually improved (which is consistent with slightly lower rates, but it didn't improve quite enough for the average lender to go to the trouble of making that change today).

Mortgage rates dropped noticeably this morning as financial markets opened sharply changed from Friday's latest levels thanks to Trump trade tweets over the weekend. The stock market dropped to its lowest levels in several weeks before bouncing back as the day progressed. As money flew out of stocks, it found a safe haven in the bond market. Mortgage rates are most directly affected by the bond market, and when demand for bonds increases, rates fall.

Mortgage rates didn't move much today, if at all. This is confounding to all those who have watched rates against the backdrop of 10yr Treasury yields (and especially those who don't qualify their view that "mortgage rates follow the 10yr Treasury yield." Indeed, such a view must always be qualified with a word like "generally" or "typically." Today offers proof with 10yr yields significantly lower (more than 0.05%) whereas the average mortgage lender is unchanged.

Mortgage rates began the day in decent shape after more trade war drama courtesy of a Reuters story overnight. In general, trade war drama pushes stock prices and bond yields (aka "rates") lower. But as we discussed yesterday, mortgage rates hadn't been able to benefit from that drama nearly as much as US Treasuries (the benchmark/yard-stick against which all other US interest rates are compared). In fact, they were very close to unchanged even though Treasuries were making a case for a nice move lower.

Mortgage rates were just slightly lower on average today with some lenders flat and others distinctly lower. The discrepancy is due to the timing of yesterday's market movements and the corresponding lender reactions. Some lenders saw enough weakness to reprice for the worse before the end of the day. Others just let it ride. Those who repriced were able to drop rates back in line with yesterday morning's rates today. Those who didn't reprice just remained in the same territory, making this the 4th straight day with very little change despite a more pronounced move lower in 10yr Treasury yields.

Mortgage rates moved up on Friday, ultimately making it to the highest levels of the week for the average lender. Underlying bond markets came under pressure as Trump made several reassuring comments about the future potential for a trade agreement between the US and China. Before that, trade war headlines dominated the week and had taken rates and stock prices generally lower. The net effect is that the market should shift from worrying about this week representing a dire deadline to expecting an ongoing and nuanced process.

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This information is not an advertisement to extend consumer credit as defined by Section 226.2 of Regulation Z. This is not an offer to enter into an agreement regarding interest rates. The rates quoted do not include discount points, origination points, or loan level risk based price adjustments. Rates presented in this report are averages and are subject to change without notice.